21-04-09 Amicus Brief Walter Copan
21-04-09 Amicus Brief Walter Copan
21-04-09 Amicus Brief Walter Copan
No. 21-1565
IN THE
United States Court of Appeals for the Federal Circuit
__________________
ERICSSON INC., TELEFONAKTIEBOLAGET LM ERICSSON,
Plaintiffs-Appellees,
v.
TALBOT R. HANSUM
NORTON ROSE FULBRIGHT US LLP
98 San Jacinto Boulevard, Suite 1100
Austin, TX 78701
(512) 536-3018
talbot.hansum@nortonrosefulbright.com
CERTIFICATE OF INTEREST
Case No. 21-1565
I certify the following information and any attached sheets are accurate and
complete to the best of my knowledge.
2. Real Party in Interest (Fed. Cir. R. 47.4(a)(2)) – Provide the full names
of all real parties in interest for the entities. Do not list the real parties if they are
the same as the entities.
None
None
4. Legal Representatives – List all law firms, partners, and associates that
(a) appeared for the entities in the originating court or agency or (b) are expected to
appear in this court for the entities. Do not include those who have already entered
an appearance in this court. Fed. Cir. R. 47.4(a)(4).
None
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5. Related Cases – Provide the case titles and numbers of any case known to
be pending in this court or any other court or agency that will directly affect or be
directly affected by this court’s decision in the pending appeal. Do not include the
originating case number(s) for this case. Fed. Cir. R. 47.4(a)(5). See also Fed. Cir.
R. 47.5(b).
The Court’s decision in the present appeal may affect Samsung Electronics
Co., Ltd. v. Telefonaktiebolaget LM Ericsson, (2020) E 01 Zhi Min Chu No.
743, currently pending in the Wuhan Intermediate People’s Court, Hubei
Province in the Republic of China.
None
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TABLE OF CONTENTS
Page
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TABLE OF AUTHORITIES
Page(s)
Other Authorities:
A. Kasdan & M.J. Kasdan, Recent Developments In The Licensing Of
Standards Essential Patents, IX National L.R.J. 242 (Aug. 30,
2019) (https://tinyurl.com/eta2pn5t) ................................................................... 17
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Secretary of Commerce for Standards and Technology and Director of the National
and signed the U.S. government’s 2019 Policy Statement on Remedies for
mechanisms for encouraging and enforcing technology standards setting and the
protections for, and licensing of, standard essential patents (“SEPs”). While
serving at NIST, Dr. Copan led the development of a national roadmap for
with key legislative, policy, and best practices findings for intellectual property
NIST.SP.1234.pdf).
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technology transfer and licensing with The Lubrizol Corporation, and has had
other public and private sector positions involving technology transfer and
intellectual property licensing. For example, during his time at Brookhaven, he led
a program across the United States Department of Energy to establish the new
Among his numerous professional affiliations he has served on the Board and in
leadership positions with the Licensing Executives Society (LES), USA and
Canada, including terms as Vice President for LES USA, and with the Licensing
Dr. Copan has a personal and professional interest in ensuring that United
activities. He has filed this brief to assist this Court in understanding (1) the
non-discriminatory (“FRAND”) licensing terms for SEPs; (2) how the U.S. patent
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Dr. Copan has no personal interest in the outcome of this particular case.
This brief is filed on his behalf in his personal capacity. This brief was not
authored in whole or in part by counsel to either party in this action, and no party,
party’s counsel, or any other person has contributed financial resources intended to
SUMMARY OF ARGUMENT
and Technology and Director of NIST, was largely responsible for determining and
implementing U.S. government policy regarding SEPs, the terms upon which they
should be allowed, and practices for their licensing and use. Dr. Copan—along
with senior officials of the U.S. Patent and Trademark Office and the U.S.
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and enforcement of SEPs and FRAND requirements. See SEP Policy Statement,
supra. The SEP Policy Statement reflects the government’s position that
because “[a] balanced, fact-based analysis, taking into account all available
remedies, will facilitate, and help to preserve competition and incentives for
Dr. Copan has submitted this brief because, in his view, the district court
order challenged in this case furthers the official policy of the U.S. government
reflected in the SEP Policy Statement. The foreign court order that the district
Chinese court to unilaterally determine a global FRAND rate for only appellee
Ericsson’s SEPs while barring Ericsson from enforcing its U.S. SEP rights in the
U.S. SEPs without any reciprocal restrictions. Dr. Copan believes this foreign
order, if allowed to fully control proceedings such as this one, would contravene
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preserving all available remedies when negotiations do not succeed. See id. at 7.
Dr. Copan believes that allowing Samsung’s Chinese court order to govern
the conduct of U.S. courts in this independent proceeding will hamper innovation
innovator’s SEPs without recourse. Further, the U.S. patent system is a lynchpin
related to U.S. patent infringement places that patent system, and therefore
American innovation, under the control of foreign courts. Accordingly, Dr. Copan
believes that the district court’s preliminary injunction should be affirmed because
it prevents Samsung and other SEP implementers from using foreign courts to
disputes, while also preserving U.S. sovereignty over U.S. patents and American
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ARGUMENT
The district court’s preliminary injunction appropriately limits and clarifies
the scope of the Chinese court’s ASI and should be affirmed. Worldwide industry
edge technology. Innovators contribute their latest and best technology to those
standards expecting they will be fairly compensated for their intellectual property.
disputes, should those good faith negotiations fail. In the present dispute, however,
global FRAND rate for only Ericsson’s SEPs, while holding back Samsung’s own
SEPs from review and simultaneously enjoining Ericsson from litigating its SEPs
respective bargaining positions, and because the Chinese court’s ASI, if allowed to
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control this proceeding, threatens to weaken U.S. patent rights that are critical to
provides that “[t]he Congress shall have power to . . . fix the Standard of Weights
and Measures.” U.S. Const. art. I, § 8. As part of that power, Congress created
NIST, where Dr. Copan served as the Institute’s 16th Director from 2017-2021.
enhance economic security and improve our quality of life.” NIST, General
Apr. 5, 2021)).
In furtherance of that mission, NIST joined the USPTO and DOJ in signing
the SEP Policy Statement. See SEP Policy Statement, supra, at 4, 8. Together,
standards” set by SDOs, “play a vital role in the economy.” Id. at 2. SDOs
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together,” which “can create enormous value for consumers and fuel the creation
This system, backed up by strong and enforceable patent laws, allow parties
to formulate their best solutions to standards because they can openly share
SEP Policy Statement, supra, at 2. These exclusive rights provide the underlying
for innovation and growth.” European Comm’n, Setting Out the EU Approach to
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are “interoperable and safe,” removing market barriers that would otherwise
One of the best examples of innovation and growth created by the interplay
between standards and patents has been the global 3G, 4G, and 5G cellular
Standards Institute (“ETSI”). The 3GPP brings together SDOs from Europe, the
3GPP hosts 140 meetings at which its 500 members from over 40 countries discuss
Patrick Moorhead, The Crucial Role of Wireless Industry Standards in 5G, Forbes
enabled by cellular standards were estimated in 2015 to have “an aggregate annual
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consumer value . . . of $6.4 trillion across six countries, above the cost of the
devices and services,” and the “mobile value chain generated almost $3.3 trillion in
Wolfgang Bock et al., The Mobile Revolution: How Mobile Technologies Drive a
in that chain “invested $1.8 trillion in infrastructure and R&D from 2009 through
investments are reportedly protected by more than 150,000 declared SEPs. See
A critical ingredient in the success of standard setting processes has been the
standards development and commit to licensing their SEPs on FRAND terms. See
ETSI, Guide on Intellectual Property Rights (IPRs) at 59 (Sept. 19, 2013) (“ETSI
Policy is intended to ensure that IPRs are identified in sufficient time to avoid
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renegotiate terms after the second party has sunk its investment.” Jonathan D.
At the same time, FRAND policies are also intended to protect against a
patent infringer that would “hold-out” from entering a patent license on FRAND
terms to avoid paying patent royalties that may be due. Hold-out generally occurs
when “an implementer refuses to negotiate in good faith with an innovator for a
license to valid patent(s) that the implementer infringes.” Richard A. Epstein &
FRAND, and Why It Matters,” 32 Berkeley Tech. L.J. 1381, 1384 (2017)
“forces the innovator to either undertake significant litigation costs and time delays
to extract a licensing payment through a court order, or else to simply drop the
matter because the licensing game is no longer worth the candle.” Id.
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for preventing both hold-up and hold-out because FRAND commitments act as “a
Tech. L.J. at 1403. These assurances are “central to the formation and continuing
ETSI and its members have operated under an IPR Policy requiring SEP
disclosures since at least November 23, 1994, when the ETSI IPR Policy was first
adopted. See ETSI IPR Guide, supra, at 55. The ETSI IPR Policy “seeks a
balance between the needs of standardization for public use in the field of
telecommunications and the rights of the owners of IPRs.” Id. at 56. More
specifically, the purpose of FRAND terms “is to balance the rights and interests of
IPR holders to be fairly and adequately rewarded for the use of their SEPs in the
implementation of ETSI standards and the need for implementers to get access to
the technology defined in ETSI standards under FRAND terms and conditions.”
But the balance that patent rights and FRAND commitments provide to
encourage standards participation while preventing both patent hold-up and patent
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“Smooth licensing practices are . . . essential to guarantee fair, reasonable and non-
so they continue to invest in R&D and standardisation activities.” Setting Out the
licensing practices” is that “[b]oth parties must be willing to engage in good faith
negotiations, with the view to establishing licensing conditions that are fair,
reasonable and non-discriminatory.” Id. at 6. The parties “are in the best position
to determine the FRAND terms most appropriate to their specific situation.” Id. If
these good faith negotiations nevertheless fail, appropriate judicial and other
remedies should be available, but as the U.S. government has stated, such remedies
should always “preserve competition[] and incentives for innovation and for
determine a global FRAND rate for only Ericsson’s SEPs while enjoining any
with this U.S. policy and avoids the FRAND negotiation process. Requiring every
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other court in the world—including U.S. courts—to adhere to the Chinese court’s
ASI will not resolve the parties’ cross-license dispute but will only delay its
resolution and allow Samsung to practice Ericsson’s SEPs in the interim without
fear of injunction and while retaining the ability to seek injunctions against
Ericsson’s practice of Samsung’s SEPs. See, e.g., Ericsson Br. 10, 14-16, 54-55.
This result distorts good faith resolution of FRAND disputes. “Although the
terms in good faith might not seem to inflict irreparable harm on the SEP holder,
the severity of the harm is magnified when such behavior becomes the industry
Competition L. & Econ. 201, 226 (2015). The district court’s preliminary
Furthermore, the Chinese action will not resolve the parties’ dispute because
Samsung’s only requested relief was that the Chinese court “determine the
Samsung Br. 12. The parties’ dispute, however, involves a global cross-license for
both parties’ patents, not just Ericsson’s SEPs. See Samsung Br. 12; Ericsson Br.
10, 14-16. As the ETSI IPR Policy provides, one SEP owner’s FRAND
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commitments can be “made subject to the condition that those who seek licences
agree to reciprocate.” ETSI IPR Policy, supra, at 40. That is what Ericsson seeks
from Samsung. See Appx12 n.10 (“Ericsson argues that its FRAND obligation is
Samsung Br. 11 (“Samsung and Ericsson negotiated, but were unable to reach
agreement on a new cross-license before the old license expired.”). The Chinese
court, however, will not adjudicate terms of such a cross-license because Samsung
has withheld from that action any consideration of its own patents and their
FRAND rates.
and Samsung is much more intricate than determining a rate for one party’s SEPs.
Under the ETSI policy, “[s]pecific licensing terms and negotiations are commercial
issues between the companies . . . .” ETSI IPR Guide, supra, at 68. “The value of
the ETSI IPR Policy as the sole vehicle for the handling of IPR issues relating to
standards lies in . . . the fact that the complex commercial issues of the details of
licenses and of compensation . . . are placed where they belong, at the center of
bilateral negotiations between licensor and licensee.” UMTS IPR Working Group,
Interim Report of the UMTS IPR Working Group (September 1998), SMG Meeting
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issues applies to both parties. IPR policies, including the ETSI IPR Policy,
Enforcement 4-1, 4-11 (2018). The Chinese court’s ASI, however, allowed
negotiations regarding FRAND terms for the parties’ cross-license into a unilateral
enforcement of its SEP rights and providing Samsung the opportunity to practice
these SEPs without fear of an injunction in the interim. If such unilateral distorting
actions are permitted, parties will presumably race to courthouses around the globe
them, including one that would distort the parties’ negotiating positions.
resolution of FRAND disputes based upon the totality of the parties’ respective
commercial positions. Indeed, even the SEP Guidelines issued by the High
People’s Court of Guangdong in 2018 provide that “FRAND requires good faith
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negotiations from both parties, but not specific outcomes” and that “[t]he rights of
Court Releases Guidelines for SEP-related Disputes, Lexology (May 23, 2018)
(https://tinyurl.com/ah3bjkn7).
U.S. courts have in the past provided judgements on FRAND rates to help
license terms, however, is tedious work involving many different factors. See, e.g.,
disputes is complicated for courts and is thus best handled through transparent,
urged that such differences are best worked out between the parties coming back to
the negotiating table or with use of expert alternative dispute resolution resources.
See, e.g., M.A. Lemley & C. Shapiro, A Simple Approach to Setting Reasonable
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(https://tinyurl.com/hrrhcd59).
SEPs and issue an ASI, however, impedes the two-way flow of information
required to resolve FRAND disputes like this one. Instead of information flowing
between the parties in bilateral negotiations, under the Chinese court’s ASI,
information about Ericsson’s SEPs flows only to the Chinese court making the
unfair leverage and ultimately delays resolution of the parties’ dispute regarding
with its FRAND obligation provides a stark contrast to Samsung’s requests to the
Chinese court. The Chinese court’s rate determination for one party’s SEP
contrast, the district court will weigh the totality of circumstances surrounding the
parties’ dispute to adjudicate whether the parties complied with their contractual
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number. This Court is asked to evaluate conduct. The legal questions presented to
The district court’s approach is also consistent with both the U.S.
government’s SEP Policy Statement and the European Commission’s view that
FRAND terms are defined through good faith negotiations. See SEP Policy
Ericsson’s declaratory judgement claim calls for “[a] balanced, fact-based analysis,
taking into account all available remedies.” SEP Policy Statement, supra, at 7.
Allowing the district court to review those claims and all relevant information—
Allowing such a broad ASI to control these proceedings would prevent U.S. courts
from adjudicating U.S. claims and would improperly encourage races to foreign
courthouses that may be receptive to orders that deprive SEP holders of U.S.
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providing incentives to inventors to apply their knowledge, take risks, and make
Allowing another nation to take complete control of how U.S. patent rights are
exercised, as the Chinese court did in this case with respect to Ericsson’s U.S.
SEPs, diminishes the incentives created by the U.S. patent system and puts the
value of U.S. innovations at the mercy of that foreign court. Innovators must retain
here. The U.S.-China Economic and Security Review Commission recently found
Beijing’s ambitions, both to secure global markets for Chinese firms and to shape
the norms and values for how emerging technologies are deployed . . . .” U.S.-
China Economic & Security Review Comm’n, 2020 Report to Congress, 116th
Cong., 2d Sess., at 105 (2020). The Commission found that “Beijing aims to assert
privileged access to foreign markets and IP for Chinese firms while controlling
access to its domestic market and shielding domestic companies from having to
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Commission notes the use of technical standards as a policy tool by the Chinese
government, whose “state agencies formulate standards and use them to advance
portfolios may result in a devaluation of those SEPs in view of the policies above.
That Samsung chose to put Ericsson’s SEP portfolio under review in China while
portfolio that could occur. If this practice is condoned, it risks decreasing the value
of U.S. SEP holders’ portfolios. “If U.S. SEP holders do not anticipate a return on
their IP because Chinese firms” or, as here, firms leveraging Chinese courts, “are
evading patents, they have less incentive to develop SEPs and to advocate for their
China’s policies toward SEPs have already “had a chilling effect on U.S.
companies.” See id. Allowing the ASI to stand unchecked will advance this trend
the interests of their own countries’ economies do not have the self-asserted
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privilege to set intellectual property valuations and pricing for the free markets of
CONCLUSION
For the foregoing reasons, the Court should affirm the district court’s
preliminary injunction.
Respectfully submitted,
Talbot R. Hansum
NORTON ROSE FULBRIGHT US LLP
98 San Jacinto Boulevard, Suite 1100
Austin, TX 78701
(512) 536-3018
talbot.hansum@nortonrosefulbright.com
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CERTIFICATE OF COMPLIANCE
WITH TYPE-VOLUME LIMITATIONS
Pursuant to Fed. R. of App. P. 32(a) and Fed. Cir. R. 29(b) and 32(b), I
certify that the foregoing filing is proportionately spaced in 14-point font and,
4,563 words.